Strong Q4 results pull up Phoenix to profit in 2020

MANILA, Philippines — Phoenix Petroleum Philippines Inc. posted a net income of P63 million in 2020 despite the decline in oil price and weak demand due to the pandemic.

The company said it registered a net income of P158 million in the fourth quarter of last year, which “effectively reversed prior losses,” leading to a P63 million net income for the full year.

“It was a strong finish to a challenging year. For this year, while vaccine developments are encouraging, the resurgence of the virus and the new rounds of lockdown may continue to dampen overall consumer confidence and industrial and commercial activities. Nevertheless, our desire for growth has not been diminished and we will accelerate it by sweating our existing assets and keeping our sharp focus on cost discipline,” Phoenix president and CEO Henry Albert Fadullon said.

Phoenix said full-year volume rose by 32 percent year-on-year due to improving market conditions as global oil prices recovered and economic activities picked up in the fourth quarter.

In particular, the company’s overseas sales volume more than doubled last year.

PNX Petroleum Singapore was able to expand its external fuels and liquefied petroleum gas (LPG) sales during the year, leveraging on the scale of Phoenix’s domestic operations.

Phoenix Gas Vietnam also pushed overseas LPG volume to triple as Vietnam became one of the fastest to recover from the pandemic.

At home, LPG grew by 32 percent year-on-year against industry contraction as the Luzon business is still coming off from a low base while the VisMin business sustained double digit growth.

“Domestic LPG is well-positioned to capture opportunities not only in underpenetrated retail and commercial markets but also changing consumer behaviors post-pandemic,” Phoenix said.

The oil firm also cited the growing momentum in the commercial and other B2B sectors, which fueled sharp recovery in domestic business, leading to 51 percent volume growth in the fourth quarter versus the third quarter.

“Pick-up has been observed in wholesale as well as in key industries such as power and manufacturing, supported by pandemic-resilient industries like fishing,” Phoenix said.

Meanwhile, retail improved by two percent from the third quarter to the last quarter due to the holiday season, which has been tempered by the general community quarantine (GCQ) enforcement in major cities.

Retail closed the year 86 percent of full year pre-COVID volume. As of end-2020, total station count stood at 670. The company is now the third largest oil player in the Philippines in market share based, according to the Department of Energy.

The company’s efforts to rationalize operating expenses (OPEX) and capital expenditure (CAPEX) resulted in a combined 38 percent decline year-on-year. Improved working capital management, shorter cash cycle, and refinancing initiatives strengthened its financial position with interest costs down by 28 percent and total borrowings lower from last year.

“We have accelerated our structural transformation, reducing OPEX per liter by 32 percent. We delivered on our commitments and cut OPEX and CAPEX similarly. We expect to continue to benefit from these operational improvements over time,” Fadullon said.